Central govt targets Monsanto Indian JV for alleged monopoly

Updated on Dec 19, 2015 12:08 AM IST
Govt calls for probe into “anti-competitive practices and unreasonable high prices” of BT Cotton seeds.
The Central government has approached the CCI to probe whether global seed giant Monsanto Company was charging higher than permissible royalties on its BT cotton seeds in India.(REUTERS Photo)
The Central government has approached the CCI to probe whether global seed giant Monsanto Company was charging higher than permissible royalties on its BT cotton seeds in India.(REUTERS Photo)
Hindustan Times | By, New Delhi

The Centre has approached the Competition Commission of India (CCI) —the anti-monopoly regulator — to probe whether global seed giant Monsanto Company’s India joint venture was charging higher-than-permissible royalties on its popular BT cotton seeds and, consequently, hurting farmers.

BT Cotton is India’s only genetically modified crop allowed for commercial cultivation. Monsanto does most of its business by sub-licencing its BT cotton technology to Indian seed manufacturers for a fee.

In a letter to the CCI, in which it sought a “detailed investigation” against the Maharashtra-based Mahyco-Monsanto Biotech Limited (MMB Ltd), the Radha Mohan Singh-headed farm ministry said it had got complaints against the firm related to “anti-competitive practices” and “unreasonable high prices” of BT Cotton seeds.

“We have not received any communication from the CCI. Should the CCI reach out to us for any clarification or information, we will extend our fullest cooperation,” a MMBL spokesperson said.

The agriculture ministry has requested a probe mainly against allegations that MMB Ltd could be abusing “its dominant position”, entering into sub-licence agreements that “appear to be anti-competitive” and “creating monopoly through restrictive agreement for unjust enrichment by charging higher trait value from its licensees and ultimately from farmers”.

The government wants probes into alleged predatory and anti-competitive behavior by the seed firm.

The action comes at a time when the central government battles an agrarian distress due to a back-to-back drought, amid falling rural incomes and farmers’ suicides.

Policymakers have until now held BT cotton as a success story. In an answer to Parliament question, the agriculture ministry had in 2010 said cultivation of BT. Cotton had “resulted in 31% increase in yield, 39% reduction in pesticide usage and more than 80% increase in profitability of farmers”.

However, this is not the first time MMB Ltd has faced allegations. In a backgrounder provided to the CCI, the agriculture ministry said cotton-grower Andhra Pradesh had “decided to file proceedings” against “M/s Monsanto” under the Monopolistic and Restrictive Trade Practices Act.

The agriculture ministry sought appropriate policy to prevent “exploitation of dominant policy and abuse of monopoly” in the BT cotton seed market.

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  • ABOUT THE AUTHOR

    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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